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ABA Banking Journal: DOJ asks Supreme Court to weigh in on BOI injunction
January 1, 2025
 The back-and-forth legal battle over enforcement of the Corporate Transparency Act and its requirement for businesses to report their beneficial ownership information continued into the final days of 2024. On Dec. 31, the U.S. Department of Justice fired the latest volley, with an emergency application with the Supreme Court for a stay of the injunction issued by the District Court for the Eastern District of Texas.
On Dec. 23, the Fifth Circuit Court of Appeals lifted a nationwide injunction issued by the district court judge earlier in December in a Texas lawsuit challenging the CTA, which requires covered businesses to report their beneficial ownership information to Treasury’s Financial Crimes Enforcement Network. Three days later, on Dec. 26, “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” the panel of Fifth Circuit judges that will consider the merits of the government’s appeal of the preliminary injunction vacated that decision and once again enjoined enforcement of the reporting rule and CTA, putting the reporting requirement on hold once again.
DOJ’s New Year’s Eve filing asked the high court to stay the district court’s injunction, reasoning that the government “is likely to succeed on the merits of respondents’ claim” and that CTA’s reporting requirements are important to the federal response to money laundering, tax fraud and the financing of terrorism, falling “comfortably within Congress’s authority under the Commerce Clause to regulate economic activities that substantially affect interstate commerce.”
The DOJ also asked the court to narrow the “district court’s vastly overbroad injunction.” If the Supreme Court decides to act, its decision could affect lower courts’ ability to issue universal injunctions.
Despite the government’s appeal, reporting companies are still not required to report.
Full Article
Related article: Updated: FinCEN beneficial ownership registry deadline paused again
CISA: White House says 9th telecom company hit in Salt Typhoon spree
 A senior official blamed the intrusions on lax security and said in one case the compromise of a single administrator account led to access of over 100,000 routers.
December 27, 2024 | Matt Kapko
Lax security controls played a significant role in allowing a China-government sponsored threat group to gain broad and full access to U.S. telecom networks, a senior White House official said Friday.
“From what we’re seeing regarding the level of cybersecurity implemented across the telecom sectors, those networks are not as defensible as they need to be to defend against a well-resourced, capable, offensive cyber actor like China,” Anne Neuberger, deputy national security advisor for cyber and emerging technology, said during a Friday media briefing.
Neuberger’s remarks came as the White House confirmed a ninth telecom company was among those compromised by Salt Typhoon’s widespread intrusion of U.S. telecom networks. The unnamed company recently determined it was impacted after reviewing threat hunting and hardening guidance provided by the U.S. government, Neuberger said.
Earlier this month, U.S. officials said at least 8 U.S. telecom providers or infrastructure companies were compromised in a campaign that went undetected for months and has been underway for up to two years.
Private-sector companies operating critical infrastructure are still not doing the basics, Neuberger said.
“In one telecom’s case, there was one administrator account that had access to over 100,000 routers,” Neuberger said. “So when the Chinese compromised that account, they gained that kind of broad access across the network. That’s not meaningful cybersecurity to defend against a nation-state actor.”
Salt Typhoon geolocated millions of individuals at will and directly targeted and stole communications of probably less than 100 individuals, Neuberger said.
US officials want to lock down telecom infrastructure
Neuberger said an investigation into the campaign is ongoing but acknowledged U.S. officials will likely never know some details regarding the scope and scale of the intrusion.
“That’s why we’re looking forward and saying ‘let’s lock down this infrastructure,’ and frankly, let’s hold the Chinese accountable for this,” Neuberger said.
U.S. officials are still scrambling to get a handle on the damage done and contain potential follow-on risk, while the threat group remains embedded in all of the compromised networks.
Salt Typhoon was very careful with its techniques and erased logs. “In many cases, companies were not keeping adequate logs,” Neuberger said.
Voluntary cybersecurity practices are inadequate to defend U.S. critical infrastructure against nation-state threat groups, Neuberger said.
“We wouldn’t leave our homes, our offices unlocked and yet our critical infrastructure, the private companies owning and operating our critical infrastructure, often do not have the basic cybersecurity practices in place that would make our infrastructure riskier, costlier and harder for countries and criminals to attack,” Neuberger said.
The White House is calling for more regulations and urged all five members of the Federal Communications Commission to support stronger security rules proposed by Chair Jessica Rosenworcel earlier this month. FCC commissioners are due to vote on the rule by Jan. 15, Neuberger said.
Full Article
ABA Banking Journal: ABA joins stress test lawsuit against the Fed
December 24, 2024
The American Bankers Association has joined the Bank Policy Institute, Ohio Bankers League and other trade groups in filing litigation against the Federal Reserve, challenging aspects of the stress testing framework the Fed uses to establish certain bank capital requirements.
The lawsuit is focused on the lack of transparency in the current stress testing process, with the groups challenging the “opaque aspects” of the framework and claiming it violates federal laws including the Administrative Procedure Act, which prohibit agencies from regulating in secret. The groups reiterated that they do not oppose stress testing or capital requirements, which they said are “instrumental to the safety and soundness of the U.S. financial system.”
On Dec. 23, the Fed announced that it is considering changes to the bank stress tests and will seek public comment on what it called “significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements.” The Fed said it is exploring the change due to “the evolving legal landscape.” In filing Tuesday’s lawsuit, the groups acknowledged the Fed’s announcement as a positive step, but they say the litigation is still needed to preserve the plaintiffs’ legal rights given an upcoming statute of limitations deadline.
ABA has raised concerns about the stress test process in the past, citing a lack of transparency in the process and that it has resulted in higher capital rules that hurt bank lending and economic growth.
“While we support stress testing as an important risk management tool, ABA has long advocated for the Federal Reserve to increase the transparency of its stress testing program, which shields key components like supervisory models from public view,” said ABA President and CEO Rob Nichols. “The opaque nature of these tests undermines their value for providing meaningful insights into bank resilience.” To align with federal law, the Fed should publish the supervisory models and stress scenarios and invite public comment, Nichols said. This would enable banks and the public to “better understand and prepare for regulatory expectations, reducing uncertainty and promoting a fairer, more predictable regulatory environment.” He said ABA is “hopeful” that the Fed will address the issues, but that litigation “preserves our ability to seek legal remedies if the Fed falls short.”
The lawsuit was filed in U.S District Court for the Southern District of Ohio.
Abrigo: The lending and credit risk issues that will shape 2025
December 31, 2024 | Mary Ellen Biery
Top-of-mind topics for lenders and credit risk professionals
As financial institutions enter 2025, the lending and credit risk landscape is evolving rapidly. Abrigo asked dozens of bank and credit union clients and members of the company’s Advisory Services group to identify priorities and challenges that will shape the coming year. From compliance pressures to navigating interest rate dynamics and an increased focus on small business lending, here’s what’s top of mind for lenders and credit risk professionals.
Regulatory compliance: 1071 in the spotlight
Banking professionals have felt increased regulatory pressure in recent years, and it's likely to remain as a top issue for lenders.
Some industry leaders are hopeful the incoming Trump administration will roll back recent and upcoming regulatory requirements affecting lending and credit, such as the CFPB’s 1071 small business lending data rule. However, with the first compliance deadline for the CFPB's 1071 small business lending data rule less than six months away, many financial institutions are moving forward with preparations.
Some legal experts believe the industry’s best chance of relief lies in a pending appeal challenging the rule. But oral arguments in the case before the U.S. Court of Appeals for the Fifth Circuit are set for Feb. 3, leaving very little time for the largest lenders affected to comply if the rule is not scrapped or altered.
In the meantime, Abrigo advisors and customers say getting ready for 1071 reporting is a top priority in the year ahead.
“The CFPB’s 1071 small business lending data regulations represent a momentous change in how financial institutions must collect and report data,” said Abrigo Senior Consultant Paula King. The 1071 rule requires lenders to collect and report more than 20 data points on small business credit applications, which will require coordination among multiple departments within the bank or credit union, she said.
The 1071 rule applies to any entity originating 100 or more covered credit transactions annually, and compliance deadlines vary based on origination thresholds, with the earliest deadline set for July 18, 2025. Examiners will focus on fair lending risks tied to 1071 reporting, emphasizing the need for project management, automation, and technology adoption to meet compliance efficiently.
The rule won’t simply mean changes related to small business data collection. King and Abrigo Senior Consultant Rob Newberry have often said many financial institutions will need to revise credit policies, application processes, loan pricing, and other aspects of their lending culture to comply. They advise institutions to begin preparations early to ensure a streamlined and compliant process related to this evolving issue in lending.
Interest rate risk and profitability challenges
Interest rate risk and how financial institutions can navigate it will remain top of mind for lenders and credit risk professionals. In fact, risk related to interest rate changes is a growing issue for lending and credit risk as additional Fed rate cuts are anticipated, according to Abrigo advisors and customers. With funding costs unlikely to drop as quickly as loan rates, the rate cuts could squeeze net interest margins, making effective repricing strategies for loans and deposits essential.
"A strong pricing tool for both loans and deposits will help institutions be more disciplined in this environment," said Dave Koch, Director of Abrigo Advisory Services. Additionally, he emphasizes the importance of a solid ALM (asset/liability management) model: "You need to be able to evaluate the impact of rate changes using more realistic scenarios for your bank or credit union."
2025 Scenes of South Dakota Calendar
 Extra copies of our 2025 Scenes of South Dakota Calendar are available to purchase. This newly designed calendar features photo submissions by South Dakota bankers, their family members, and friends.
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SDBA State Legislative Day
February 12, 2025 | Pierre
 SDBA’s Legislative Day is your opportunity to stay informed on both state and federal legislation which could impact the banking industry. This is your opportunity to actively participate in shaping the future of banking in our state. This gathering promises insightful conversations, networking, and direct engagement with key policymakers.
Hotel room blocks release January 10 - RESERVE TODAY!
Information & Registration
Understanding Bank Performance
Building Better Bankers
Virtual: January 8, 9, 15, 16, 22, 23, 29 & 30 | 10 a.m. - 12 p.m. Central Time
 Participants will learn how to assess and analyze a bank’s financial performance by working with data from real institutions. Using financial statements from one sample financial institution along with statements from their own banks, participants will become familiar with the ins and outs of balance sheets and income statements and learn how to apply key performance metrics to the data presented in these documents.
Having learned how to interpret and analyze a bank’s financial statements, participants will gain deeper insight into the factors affecting bank performance. Later sessions in this course will address ways in which performance may be hindered or improved by funding strategies and risk management. Ultimately, participants will be able to review a bank’s financial statements to identify strengths and weaknesses and be able to recommend changes that will lead to improved performance.
In the final session of this course, participants will put what they have learned into practice. Participants will analyze a new data set, rate the bank’s performance and suggest strategic adjustments that might benefit the bank.
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National School for Experienced Ag Bankers
June 23-26, 2025 | Spearfish
 The National School for Experienced Ag Bankers is a seminar for experienced ag bankers who want to further develop their ag lending skills, learn new skills, confirm existing methodology and meet fellow bankers who share the same career path. Taught by a nationally-recognized faculty of bankers, academics and other real-world ag banking practitioners, this program is focused on ag lending opportunities and challenges that are relevant to ag bankers from across the United States.
Information and Registration
Banking Matters Podcast
 Today’s financial trends, topics, and practical matters, that’s what Banking Matters is all about. The host is joined weekly by guests from around the country whose insights into the world of banking, regulation, and compliance keep you better informed.
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